Rearrangement of Property in the Oil and Gas Sector

Preparations for the elections are accompanied by quite serious changes in the structure of property of oil and gas companies. After the elections this process will accelerate further. A plan of privatization in the next three years is already drafted; it will directly or indirectly affect assets in the oil and gas sector. There is also a less explicit “creeping privatization”, e.g. when the state transfers licenses on beneficial conditions to private companies removing other bidders from tenders. The number of such cases is growing. Privatization is an old goal of major administrative and political groups and the means of minimizing political risks in the period of enhanced political turbulence. Liberal experts have formed a firm opinion that the state presence in the sector is growing. In reality there is an opposite process. The matter is that new owners of assets are loyal people.

The report elaborates on the following issues:

Main beneficiaries of privatization.

Privatization plan

What will the government sell for sure and what is likely to go on sale in the next three to six years

Prospects of selling Rosneft and Gazprom Neft

Role of foreign companies in privatization

Transfer of licenses to private companies on preferential terms with the aim to sell stakes in them to nonresidents

Cases of Trebs and Titov and Yamal projects

Possibilities of privatization in the gas industry

Prospects of emergence of new “Novateks”

The future of large private firms

Strategies of LUKOIL and TNK-BP, prospects of changing the companies’ shareholder structure

The future of TNK-BP in the context of the Rosneft-BP case

A possibility of disclosing real shareholders in Surgutneftegas

AFK Sistema’s involvement in the oil business

Reasons and future results

Consolidation of Bashneft and Russneft

The contents of the report:

Introduction

3

Gazprom: from Gathering to Asset Distribution

5

Consolidation of NOVATEATEK Shares

6

Transfer of Gazprombank to Bank Rossiya Clan

9

Story of Four Yamal Deposits

12

Sale of SeverEnergia

13

Sibneftegaz Story

16

Nortgaz Future

18

Sale of SIBUR Holding

19

Sale of Other Non-Core Assets

21

Role of Nonresidents in Privatization in Russia. Fate of TNK-BP

24

Role of Nonresidents in Privatization

24

BP-Rosneft Deal, Future of TNK-BP

27

Lukoil: diverse developments

34

Sistema in Oil business: New Gatherer of Assets

42

The “Putin Aristocracy” as Important Consequence of Privatization of Property